maybe rahm can call scott walker. "squawk box" begins right now. welcome to "squawk box." i'm becky quick along with joe kernen and andrew ross sorkin. coming up, we do have complete coverage of the teachers strike in chicago. well focus on the issues at heart of the fight. and ask what the situation tells us about education reform and labor in this country. plus the potential implications on the presidential election given that the strike is taking place in president obama's hometown and that chicago mayor rahm emanuel once served as his chief of staff. our guest host this morning is very passion that the about the issue of education. we have home depot founder ken langone whole be here at 7:00. and he'll also be joined by dick grasso. and of course today marks the 11 year anniversary since the terrorist attacks of september 11st.

there are observances taking place in new york, washington, pennsylvania and many other parts of this country. we have aol chairman and ceo tim armstrong and kenny dichter teaming up to try to honest or the victims and help their families. both will be joining us to talk about their work with action america at 6:50 eastern time. first, though, let's bring you up to speed on this morning's top stories. >> and welcome back. nice to see you back and feeling better. let's talk about some of the headlines this morning. germany's high court will be ruling on the legality of the eurozone permanent bailout fund tomorrow. the court rejected a last meant plea to postpone. it's going to decide tomorrow whether to issue an injunction that would prevent the country's president from ratifying germany's participation in the european mechanism and fiscal pact. optimism they will back the

bailout fund september tnt thee higher this morning. and the sale of aig to under 22%. but here's the important part, treasury says this represents a profit, a profit, of $12.4 billion to date on uncle sam's investment. and of course four years ago that was something that i don't think anybody including hank paulson and tim geithner imagined. and a report this morning that regulators rejected a 2008 suggestion that banks give up control of libor. a front page article in the "wall street journal" says regulators didn't want responsibility for more oversight and british bankers association members wanted to keep control of that rate. joe, what do you make of that? >> not sure what to think of that. you still sound sick. >> i still have it. >> worse than when i was here before. >> becky got sick, she's fine. >> i had a different kind of sickness. >> you it's lingering.

it's weird the way we recognize these september is 11th -- last year was ten years, so it was all these things were planned, so 11 is not before before it's weird. base ten means more or something? a weird way to do it. the one thing that i would thinking this morning, very fresh in my mind, but then again it seems like even longer than 11 years when i think of people that i know in my neighborhood that lost a loved one and people that lost brothers or people that lost sisters. and i think about how long they've been dealing with it and some people that i've known for that long, the entire time i've known them, i knew, oh, yeah, he lost a brother or she lost a brother or sister or something. or a participants. and it seems like it was a much longer time. so something we never want to quit talking about. strike negotiations are expected to continue in chicago today. still no agreement to end the

teachers strike. i bet it ends quickly for a lot of reasons. not a good time when you have your chief of staff on the other side of a coalition that you need as part of your re-election efforts. >> how do you think it ends early? sgli just think they'll get it settled. rahm emanuel is quoted as saying this didn't have to happen, they're very close. they're not back talking, i guess -- >> are you saying rahm will capitulate? >> i think they'll get together one way or another. >> i can't believe they went on strike. >> 350,000 kids with nothing to do. most kids out working for $47,000 a year. the median income. they're getting $71,000 to work half as many hours plus $15,000 in benefits and they're graduating 55% of their class. and only six out of 100 graduate from college of the ones that they are educating in this school system. you know, right next door, scott walker, you saw what obama said about scott walker, vilified him

for what happened with collective bargaining. let see what he says about rahm. teachers union and city leaders have hammered out a deal covering all but two sticking points, teacher evaluations, the idea, and who can hire teachers. we'll ask what the strike means for the rest of the country at 6:30. passionate voices on both sides. committee for education funding. we want to know what you position. so tweet us your opinions on the strike @squawkcnbc. did you find any numbers that you were looking for that bolster your case that this is -- >> you want me to debate this with you. >> no, you said where did you get these numbers. so you could hopefully find something that weren't as damning. in a standoff, "new york times," stand ophiuchus, latest signs of unions under siege. unions are under seemg. they're working 1030 hours a year, half as much of a 40 hour

worker for $86,000 basically with benefits. this is the latest sign that the unions have been pushed back on their heels, andrew. steven green house. >> and i won't defend unions in this particular case because it's disgust wlag's happening with the children. >> the strike is about the children. it's about the children. >> it is not. >> you know rahm went from 5 1/2 hours, makes help work 7 hours now per day. >> and i though we have viewers who i imagine are teaches. i don't want to get into the money, but this idea that somehow teachers work half as much as everybody else in the world i think is one of the most unfair accusations. >> i agree. my mom was a teacher. and they all work hours that are not clocked. and the difference, if you're not working those extra hour, they should be able to let you go if the perform abc ance is n

>> i'm not defending the unions. i have a real problem with what's going on in chicago. but that assertion and it's over and over again feels unfair. >> maybe it's just because i assume people know that the teachers themselves are the people that are educating our children. and they're the most important people in our children's lives. do you know how long people -- reason unions have become so powerful is because you can't criticize teachers because of what they're doing for your kids. wind much like michelle obama's speech about saying don't chase the dollar. >> you need to do it on merit and you need to be able to fire them. >> and that is the sticking point. >> i'm talking about the teachers unions, not the teachers. of course you defend teachers. >> but a good teacher, and the difference between a good teacher and bad teacher a give teacher does not -- >> you can't be fired after two or three years for the rest of your life and you make twice as

much as the average person. >> >> i'm not disputing anything i said. i'm just saying the best teachers i ever had, i promise you worked around the clock. just like you do, just like becky does. >> but the difference is that the union -- >> talking about getting summers off and making $71,000 plus $15,000 in benefits versus an average $47,000 -- are you going to say happy camper next? anyway, go ahead. >> the problem is it you're not able to weed out the bad teachers. that's the problem with the teachers union. >> i'm with her and you, by the way. >> you're not. >> we are. >> then i have to change. >> let's take a look at the markets this morning. yesterday we did see the major averages full back slightly. the dow down about 52 points. s&p off by the end of the day by 8.8 points and this came as some of the major averages closed at the lows of the day. there was technology weakness.

futures are indicated slightly higher this morning. also let's take a look at oil prices. and after everything that people have been waiting on with the federal reserve, whether or not ben bernanke will step in with more quantitative easing, crude oil standing at $96.63. let's take a look at the ten year note, as well. you can see on the ten year that if the yield is at 1.664%, the dollar -- everything waiting on whether ben bernanke will step in. we're continuing to watch europe. but the dollar is weak across the board. let's take a look at ghoold prices. up slightly. >> let's go across the pond to kelly evans in london. >> keeping an eye on european markets in particular for you this morning, i want to start

with the ibex 35 in spain, down 1%. you can call it profit taking. we'll take a look at how the bond sector is playing out in just a second, but also seeing a little bit of upward pressure on spain's ten year there even though there's been an indication that germany will move forward with this constitutional court ruling. people are taking a closer look at just what spain in particular might have to do in order to receive that funding. let's move back here, though, take a look at the cac 40 in pair rirri paris, down a third of a percent. ftse down half a percent. the pressure in particular coming from the luxury sector after a burberry profit warning. toich ba deutsche bank shares up 3walmos

2%. they've committed to the universal banking model. they are aiming for a post tax return on equity of 12% by 2015. they will take a 4 billion euro restructuring charge as they accelerate deleveraging by creating a noncore operations unit in which they'll shift 125 billion euros of assets. they're also looking for cost savings about 4.5 billion euros a year between now and 2015. 8%, that's what the bank expects will be it core tier capital one ratio under basel iii by march 2013, 7.2% for the same measure by early next year. ultimately aiming for 10% by 2015. the cost income ratio there seeing under 65% p so investors pretty much liking what they he hear. that's what's happening with deutsche bank. helping perhaps to sort of keep a floor under the dax for the time being. but burberry group down 18.5%

this morning. this after the company came out with a profit warning, it said it was going to meet the lower end of its target fiscal year 2013 range of 407 to 454 million pounds. the average analyst was looking for 429. doesn't sound like a disaster, but it was really the timing and nature of the announcement in which the company said -- following of course saying trends were slowing, but it said the external environment was becoming more challenging. same store sales were unchanged in the ten weeks through last week with a deceleration in recent week. 6% for retail sales total. and double digits as we've come to see in the past. it's taking appropriate action t to maintain short term profits. in response, take a look at the sector. you can see why there's pressure

across european markets this morning. a quick look at the bond wall. aside from corporate news, it really is all about the euro group meetings this weekend. when and whether spain will ask for a bailout. some upward pressure on yields. italy meantime just goes to show you people are differentiating between these two for now. that is seeing a bit more relief. 5.147 is the level. back to you guys. >> you did it. you're tossing back without one mention of andy murray. >> oh, i know. it's so exciting. if you want to talk about the big news of the morning, it is all about andy murray. >> i know that's why i was -- >> first time since 1936 a british -- >> and my favorite if all of this is because apcandy he murray brought in ivan ley ivan

and there was criticism about overpaying these guys and how andy murray couldn't planning to get to the finals of the major. that conversation happening just earlier this year. attitu he's in the finals at wimbledon, wins the gold at the olympics, having just an incredible year. >> everybody's overpaid because we need to get everybody at the same amount. but -- >> it was close yesterday. did you watch it? >> i watched it. i was up late. >> i went to bed because i couldn't take it anymore. >> the bengals were on and they didn't have a chance. >> were you you flipping back and forth? >> becky, if you thought it was late your time, you can imagine the difficulty. we had to kind of wake up to the head lines this morning. >> sean connery, he's 82, he was so psyched. and i don't know what kevin spacey was doing sitting right

behind him. but there were almost every rally was 30 shots. the most unbelievable -- >> and i thought djokovic was going to get him. i thought he wouldn't have the energy to stay with it. >> djokovic's legs went. ? third set, wow -- >> if andy murray hadn't won the first tie break, i think djokovic would have had enough to win in four. >> he's so solid, like a wall hitting back and forth. but i'm glad murray -- >> djokovic's hair, it's almost like a 1,000 pile rug. almost like a pelt. have you seen it? >> now you sound like what joe kernen's hair would be tweeting. >> i'm channeling -- >> i thought joe kernen's hair went on vacation?

doct >> he's back in a big way. and the two sick kids are ganging up on joe. i know. thank you. thank you for defending me. so tell me again, teachers are actually. . they were some of the most important people -- i've never heard anyone say that before about teachers. talking about unions and what is happening to our -- >> and by the way, the flip side of what's so unfair about this is the teachers who actually do work 24 hours a day are getting paid the same amount as the people who are actually only working the 20 hours you're talking about and that's unfair, too. >> the $86,000 with again fits that we're fwauk are for new teachers. experienced teachers are making much more than the $86,000. >> i thought it was 71 -- >> 71 plus 15. you have to get the new numbers. get the "new york times" numbers. they can do it in discounted net

future value and with inflation adjusted. they'll get it down to about $32,000. >> but senior teachers make more. >> $71,000 is the average plus $15,000 in benefits. >> right. and then you know -- >> but that's not how most people think about it. they think 71 -- >> 71 plus 15. >> i'm not disputing this. i wish we could pay teach hers as much as humanly possible. >> just like you want to do for ceos, pay for performance. >> absolutely. >> when we come back, key technical levels on a number of key u.s. equity indexes. what will drive today's trading session? we'll ask kevin ferry. first, though, more sports news. two nfl games last night. ravens beating cincinnati, sorry, joe. >> they were all playing for the guy who just passed away, art

modell. the very first play that i switched to was a passing play. like 80 yards. i said i'm going back to ten miss and i'm ne. tennis and i'm not coming back. it gets old. >> ravens, an 11th straight home victory. also in california, the chargers defense holding oakland without a touchdown until the final minute. the chargers claiming a 22-14 opening game victory. %

. camry the top selling vehicle in the u.s. toyota has been dealing with recalls, limited supply and redesign during the last three years. >> alex wallace joining us from the weather channel. 50 degree when i walked out this morning. feast or famine on the east coast. >> i hear you, but if you're like me, you're loving the fall-like conditions. we'll enjoy it for a couple more days before things start to warm up a little bit. here's today's forecast. bright sunshine.

best chance for rain is in florida. tampa, orlando heading southward from there. in the middle of the country, also pretty quiet. we'll find windy conditions and really starting to heat up here. 95 around minneapolis, so still summer like there. and then west coast, try for the coastal area, but in the interior, particularly around the four corner, we've got our risk for showers and storms continuing for the day. those rain showers could dump quite a bit of rain to lead to flash flooding and flash flood watches out at least through tonight. moisture flowing northward and that will keep the threat for the showers onphoenix and vegas could see rain. and the heat in the middle of the country building out of the cold front.

behind the front, things cooling down quite a bit. so 95 in minneapolis. by wedding who, look at that drop, 69 and we'll watch the cooler air begin to shift east. but again out ahead of it, warmer air. behind it, things cooling back. >> alex, thank you. i think i can hold off on the fall, but we'll take what we can get for now. i stim ll am missing the summer little. kevin ferry joining us. watching the indexes yesterday, we saw a pull back on concerns on luxury. is this a broader concern or burberry specific issue? >> i think it's a little broader. the nasdaq was leading the market down. i was impressed with the s&p held in considerably well.

but then succumbed late in the last hour. so given what happened around the rest of the world, we've been able to bounce off of that level for seven or eight points. so i think that's a pretty healthy sign because it was definitely getting sketchy last night. >> do traders want to see ben bernanke step in with qe-3 or not? >> i'll say no. i think you're really getting to the point now where people are kind of fed up with the process more than the actual activity. and so it's a difficult -- >> what do you mean? >> well, they've opted to move towards a long period of trying to get their point of view out. and so once they start to act, the feeling i get is they'll just beginning another large clumsy player in the marketplace

p. so it's difficult to stay what the benefits are. spreadses are tight, rates are low. and those two combinations are really just the federal reserve and other central banks putting their thumb on the marketplace and suppressing spread product. and so that process is starting to wear on those of us that prefer a free market, more of a debate about what the price should be. >> if the fed comes out as sleeve liesman and others expect and there is a qe-3, it turns out to be small incremental steps, more like a half point move like they would be doing with interest rates, what do you think that meanses? >> i think they'll hope that they can continue to keep the volatility down for that reason. by just getting away from the numeric and just saying we'll

keep toing it up we see the results we want. so i think if they lean that way, and certainly there's still a lot of talk about just continuing something at mbs or messing around with twist, those are the things that will be at least in the short term what you have to watch. they have to issue ten year notes on wednesday, 30 year bonds right before the fed. it makes the bidding process a little sketch che for this week. once they announce the program, whatever it is, thennic we can get back to a little bit more bit as usual. >> okay. kevin, thank you. coming up, teachers striking in chicago for the first time in 25 years. the story sparking discussion across the country and yet on our set. we'll host a debate right here next.

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welcome back to "squawk box." our top story, schools out in chicago. more than 25,000 teachers and unionized personnel going on strike for the first time in 25 years. the story sparking discussions across the country and on our set. a tweet we received from@jewels. teachers want better condition, not money. right now 45 in a class with no air conditioning, unfair to judge based on student grades. the one that i got from i have no idea how hard teachers work from a teacher.

know, i have no idea. which scared me. hopefully she's not in -- >> can i say it's unfair? >> oh, no, it is southern fair. just making a point that it's spelled -- >> it's funny, i know, but -- >> i'm talking about the unions, not the teachers. so your point is that some teacher hes are good people, that are great educators. and i never heard that. i never heard anyone defend teachers. >> no reason to be sarcastic. >> i know this about teachers .some of the most dedicated people that work for less money than any other profession. you're basically punting on make the big money because you're trying to make a difference. i know that. but it's not working under the current structure because of the teachers unions. and when you got 55% of kids graduation rate and only six kids that start in high school

ever get a college agrdegree --, this is why we have 8% unemployment. this is the stuff we have to take care of now. >> don't criticize the teachers. there there are teachers that deserve criticism, but to broadly cast it is tough. >> joining us now, joe packer and rick hess. joe, it really is about the kids and we're not getting it done. we're spending a lot of money. why can't teachers have normal evaluation like every other profession to weed out the bad ones and to reward the between ones some what's wrong with that? >> sure. i think teachers do want good evaluations. i just think that there's concern about how they're done and should they be overly based on student test scores. >> but is there any other profession where after two years or three years you have a job for life no matter what happens? why is it like that just in this

profession? >> well, it's not really like that. even when teachers get tenure, they can still be fired or did dismissed for cause. >> you see the numbers in the new york city school system. they're de minimis the number of teachers that you can actually hold accountable, the ones not up to performance. >> sure. i think there's a lot of changes going on in teacher evaluations and so-called tenure and seniority. and those are all decisions being made at the local school district level and it takes both sides. so my coalition has both school board, school administrator, teachers. i won't favor one side or the other. but all these things are negotiated between the school board and school administrators and the local teachers. >> every argument, rick, that we have and we talk about what do we do with these structural unemployment problems. and the income disparity, how do we make it equal opportunity for everyone to succeed in this great country. and it all boils down to education.

it always comes back to that. and do we need to give more money, do we need to reform the system. . not too many businesses that just have no competition to keep them honest other than the public school system. >> let's keep this mind what we're talking about in chicago the average teacher salary of $76,000 a year. shortest contract day and 16 to 1 student/teacher ratio. offered 4% increase a year. and in turn he has asked for some initial accepts on teacher evaluation in a city where 99% of teachers have been rated effective according to the work by the new teacher project. and rather than stay at the table, the union has elected to strike over this.

i would say, look, there a slow windingly slow pace of adoption on the kinds of changes to tenure, to teacher compensation, to work rules that everybody including joel acknowledges are appropriate. we've seen some of these adopted at a high level partly in response to the president's race to the top program but but you in chicago, what happens when rubber meets road and somebody as tough minded as rahm emanuel is just getting body blows from teachers who are justed a tod a about majoring these changes. >> you don't have scott walker here with the devils horns and vilify him. you have president obama's former chief of staff is on the other side of this whole discussion. that's a problem for everybody. that's a problem for the president, a problem for the unions. >> you have to look at the bigger issue. nationwide, public schools have lost over 300,000 jobs in the

last four years since the recession started. class sizes are going up, fewer counselor, fewer reading specialists, cut backs in after school programs. so school buildings in a lot of places including inner cities are crumbling. that's why we support any initiatives at the federal level. >> but this seems like an in-auspicious time to turn up its nose at a 16% increase over four years. initial ask was 30% raise over two years. >> i'm not going to get into specifics of the chicago teachers discussions because i'm not involved in that directly. as i said, we have both school boards and school administrators and teacher groups in on you organization. i think it's the broader issues. and while teacher evaluations are important, we also need to look at what else do kids need. there's an overwhelming increase

of the number of children in poverty, so we need to look at factors affecting kids, make sure they have adequate child nutrition that their parents have stable house, wrap around service so is that schools help meet their broader needs. we can't focus just on tests and test scores. we need to everybody is the whole child, make sure they have a comprehensive curriculum. that's also why we're very worried about the pending cuts in congress. >> is it fair to say that the chicago teachers union strike is really bad news for you and your initiative, as well, it's not putting a highlight on the things that you're trying to focus on, correct? >> i don't necessarily think so. it's a focus on we have needs in education and some of those are issues taught over at the local level. but the reality is teachers care about the student, administrators care about the students. >> but when you see something

happening in chicago and the headlines it's generating, it doesn't generate a lot of sympathy from people watching around the country. it would make things that you're talking about which sound like sound initiatives more difficult tos pass through congress when you get headlines coming from a fight like this. >> if i can hop it in here for a second, part of the challenge is i similar sympathize with what joel is talking about and the good intentions. the challenge is there's a real concern that all of these dollars don't wind up funding new programs for kids. but wind up subsidizing health care and retirement benefitses for employees and soaked up in additional increments for current employee. and jold raises the question of school boards and superintendents. what we see with somebody like rahm emanuel is management finally stepping up to the stalstal

table. if you look back at the quarter century, you've seen decades of school boards and superintendents getting rolled by the unions. you've seen that across the nation. you've seen collaboration where superintendents and school boards have balked labor at any price and we end up with uned wie wielding contracts aunnd unaffordable benefits. >> that's right, let's put more money in, let's rebuild the school and then it just flies in the face of all the stuff you're trying to do. >> but if you look -- i'm in the here to defend the teachers unions and i don't work for them now, but one third of the teachers are not in unions. so most of the southern states, there is it no collective bargaining. so if teachers unions are bargaining by administrators was the cause of the problem, one

would expect that places like south carolina and georgia and texas would have the highest achievement levels in the country. that's not true. places like massachusetts which are heavily unionized have among the highest achievement levels. so i don't think one can play low student performance or poor teach ever quality on whether or not collective bargaining exists. >> all right. thanks to joel and rick. >> this tweet just came it in, simple math. 20,000 teachers for 400,000 students equals 20 students per class, not 45 per class. i figured out the problem that was in reference to a previous tweet we just got. of course you can send us your thoughts @squawkcnbc is the handle. at optionsxpress we create easy-to-use, powerful trading tools for all. like our all-in-one trade ticket. we put strategies, chains and positions all on one screen. start trading today with optionsxpress by charles sch

negotiations are expected to continue in chicago today, but as of right now, there is still no agreement to end the teachers strike. kevin tibbless joins us from the windy city with more on this. you are right outside the school board offices? >> reporter: i'm outside the scho board offices this morning. the sun is starting to come up and for a second day, the parks parents of some 400,000 kids are going to be searching for an alternative place to send their children. this is difficult for working parents. we met many yesterday who simply could not find anyplace for their kids to go. a lot of teenaged kids are being left at home to fend for themselves obviously. which in many communities is probably not something people would have a second thought about, but in many parts of chicago, obviously there has been a lot of violence here this

summer and that is something that is at the top of people's minds. the only real good news that i can report to you this morning from chicago is the fact that the two sides are still at the barb gaining table and each evening as they leave it or depart from it, they say that progress has been made. but obviously not enough progress has been made to get the teachers back into the classrooms. >> kevin, when you are -- what you jis said, people immediately feel for the 400,000 parents trying to figure out -- they're trying to work at their job where not making as much as the teachers. this is not a good pr situation i don't think for the unions. and then you add in rahm kree manu m emanuel was the former chief of staff for president obama and all this happening with 57 days to the election. you can't make this stuff up.

the amount of pressure to get this settled quickly, because it doesn't help the obama administration either, what are you hearing behind the scenes? i figured it would get settled today. i can't imagine it goes past today. >> well, i think on sunday a lot of people would have been saying that they couldn't imagine that this thing would have happened in the first place. but we have to bear in mind that this is a fairly tough union here in chicago. they are standing up for what they see as right. they are very concerned about the fact that their pay is being tied to the performance in the schools. and again as i mentioned earlier, a lot of the performance in the schools, the teachers say and it's not kevin tibbles saying this, the teachers say that a lot of the performance in the schools is not particularly based on what's going on in the schools but what's going on in the community outside of the schools. there are some very, very dodgy neighborhoods in the city, a lot of poverty, 80 prgs of the ki%

getting those meals at their schools. so a whole dynamic taking place here that this city hasn't seen in 25 years. this city hasn't had a teachers strike in 25 years. but the points you make is very well taken especially here on the streets of chicago. a lot of people asking how could this be happening in chicago. this is where president obama comes from. this is where his former chief of staff is now the mayor. how could they be having this confrontation with the unions so close to a presidential election. its -- what the heck, it's -- >> crazy. a lot easier when you got a villain like scott walker. just hard. it's really -- axelrod has got to be pulling his hair out like what do i do. he'll be there soon. >> well, the real thing here is this is only day two. i must say that the people that we spoke to yesterday, there is

a lot of heart for the teachers out there because people are concerned about their children. they are concerned about the overcrowding in the classrooms. they're concerned about dilapidated classrooms. they even talk about the fact that it's 100 degrees in the classrooms in the summertime and they don't have any air conditioning. the parents are canned. there is a lot of support for the teachers. but i must say how long does that support last. how many days does this go, how many days to the parents have to take their kids to boys address gir gi and girls club before they start to lose patience. >> kevin, thank you very much. we appreciate it and we know we'll continue to follow your reports. that's kevin continue tibbles. we have two men never sort of things to say, not everyone on air yet and already fired up. the chicago teachers strike, health care and the fed and

business in america just wait until they make to the set at the top of the hour. first, though, we are introducing another two business men teaming up this morning. joining forces for a good cause and will join us with that story when "squawk box" comes right back. bob... oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. nave 50% on banners.

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the 9/11 terrorist attacks and joining us on set this morning are the co-founders of action america, kenny dichter, founder of marquis jets and tim armstrong, aol ceo and chairman. you were here a year ago, launched this project, action america, we had mr. entourage on the set at the time, jerry ferrar. >> we did. >> tell us what you've done in the past year. >> we've had a great year, getting ourselves organized, year two a little bit more focused and tim hit me, i want to say it was july last year, and he had just had a breakfast with mayor bloomberg and mayor bloomberg challenged him to get people moving. >> get people moving on 9/11. >> he wanted more focus on the 9/11 museum, he wanted more donation and he thought tim was the right guy and of course i was just retiring from marquis jet, on my way home from a dinner and tim called to me you

got to get to my office at 7:00 in the morning. we have something cooking. >> the goal at that time they had 300,000 people who donated to the 9/11 memorial and kenny and i thought can we get it to 10 million. we put a group of people around the 9/11 memorial. it expanded out. americans love action and once we got around 9/11 we saw a lot of other opportunities. we're partnered with the 9/11 memorial, tuesday's children and the wounded warrior project. people are donating, sharing across the country and we've had hundreds of thousands of people and millions of dollars raised already in one year. >> how much of this is online? >> the online is huge. we have mobile and online if you go to actionamerica.com you will see an ability to donate, share, find opportunities for volunteers. we wanted to find partners in the 9/11 day service, american express, target, clear channel,

new york stock exchange. >> what goes on the day of service? >> you have the hundreds of thousands to see volunteer opportunities across the u.s. people to take their family, friends, kids and volunteer and we have thousands of aolers across the globe who want to volunteer and want to turn 9/11 from a day of remembrance to a day of action. last year we set a cookie lemonade stand and raised money for the wounded warriors and i think we try to keep it really local. kenny d. was out family wise last year. >> my kids, st. barbabus, close to us, we always do something for that crew and my kids are actively involved in that, i think getting the next generation i guess the generation "z" moving is really important and i just want to

make a note that alex morgan, who was one of our superstars from the usa women's soccer gold medal team and tyson chandler are going over with tim and i on behalf of action america and ringing the bell at 9:30. alex actually is walking in a fashion show, that ubisoft is putting on and they're auctioning off what she's wearing for action america on charity buzz. exciting day. >> who is ringing bell? you're going to be down there as well? >> we partner with new york stock exchange and dunkin and 9/11 day of service. >> actually i'm going to get the assist. tim, the big man, tyson chandler will leave it. i'll try to dish when it comes to who will ring it. >> 9:30. >> are you going to be watching? >> absolutely. >> thank you guys for coming in, you do important work. we appreciate it. give us a web address. >> actionamerica.com. >> actionamerica.com, thanks, guys. >> thanks. when we come back, dick

grasso and ken langone.

a passionate belief, and the foundation on which merrill lynch has been built. today, our financial advisors lead from a new position of strength. together with bank of america, they have access to more resources than ever before. a steadfast commitment to help you achieve your financial goals in life. that's the power of the right advisor. that's merrill lynch. the economy needs manufacturing. machines, tools, people making stuff. companies have to invest in making things. infrastructure, construction, production. we need it now more than ever. chevron's putting more than $8 billion dollars back in the u.s. economy this year. in pipes, cement, steel, jobs, energy. we need to get the wheels turning. i'm proud of that. making real things... for real. ...that make a real difference.

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money lessons from market legends. "squawk" special summit on the future of finance continues, this morning former nyse boss dic grasso and home depot co-founder ken langone weigh in on banks, regulation and the fed's next move. making on the money calls. top stock picker mike mayo shares the secrets of his trade. plus the ongoing labor drama at the nation's third largest scho school. >> what do we need? >> contracts.

>> when do we need it? >> now. >> the second hour of "squawk box" begins right now. good morning, everyone. welcome back to "squawk box" on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. we've been watching the future this is morning and so far looks like we are in positive territory, the dow futures up 21 points above fair value, the s&p is indicated higher as is the nasdaq. straight to your morning headlines, the first chicago teachers strike in 25 years is into its second day this morning, that has left 350,000 students at home. two most contentious issues, performance evaluations and recall rights for laid off teachers. also the treasury sold nearly 554 million aig shares at $32.50 apiece for a total of about $18

billion, cuts the government's share from 53% to 20%. the treasury has nearly $20 billion in profit from the 2008 bailout of aig. a jpmorgan report says expected introduction of the iphone 5 could add, get this, a third of 1% or more to fourth quarter gdp for the nation. apple is expected to introduce that phone at a media event scheduled for tomorrow so yes there are very high expectations. >> in studio today, i was going to read all of these things about who these guys are. it's grasso and langone. do people really need to know? i'll do it in case you're a new viewer. gra grasso, former nyse ceo and ken langone, co-founder of home depot. the third musketeer would have

been eliot spitzer if he could have joined us today. >> he's coming in the next hour. >> is he coming? who called? >> he's calling in to the show. >> i hear he had a date and couldn't make it. >> the first thing to talk about, we just had, you saw kenny dichter and tim armstrong on, i think they have similar feelings about how to handle 9/11 and we've mourned and we continue to mourn but their idea is from here on out and the future, let's do it as a day of action, when you sort of move from morning, you never leave it completely but you make it something positive. >> i think you have to do that, joseph. you said it earlier in the show, kids who were born post-9/11, of those whom we lost that day and 3,000 people lost that day, including 343 firefighters, 23 new york city police officers and 37 port authority police

officers, i think we have to take the experience of 9/11, 11 years later, and say what can we do in a positive tone. there are 35,000 people who walked out of those towers because of the bravery of those firefighters, and police officers. are we doing enough to support the first responders, not just here in new york city but around the country. you can't have economic growth and development unless you have a state society, that's cops, that's firemen. what are we doing? look at this tragedy in chicago. the tragedy is not a teacher-driven tragedy. it's driven by unions. >> i tried to make that point, banging my head against the wall. >> i think you're right because we take 9/11 as a day to remember, but to go forward on a positive tone. i look at lee iopi who lost his son as a new york city

firefighter. lee dedicated himself to creating a tribute center, which is right across the street from the old world trade center and lee has done such positive things bringing, if you will, not just the mourning effect but the morning after effect, what can we do positively to make the world a better place and i look at ken here, and ken and i go back and forth a lot, and i'm surprised that you would dare put us on together. >> you mean visually. we keep adjusting the lights looking for a good lighting for you two and we have not found one. >> my hair is natural. >> oh, you're still on that thing that mine, you think there's something going on here, nothing. look. >> we had a guy come out last week and he had on the show last week, he gave up the bottle. >> oh, larry. no, we asked him about that. we asked larry and he said that, remember, you asked him, becky. >> i was getting coffee but

somebody asked him about it. >> he looks handsome, dignified. >> i used to do it with my children and i'll never do it again, i'll swear on my own life. >> you said you don't do it. i'm not el yat spiliotiot spitz. i'm an old man, i'm going to be 77 sunday. today is my sister-in-law's birthday, happy birthday janet. >> don't hate me because i'm beautiful. >> you're handsome i'll tell you that, if i had your looks i'd -- >> i need strings, a laser thing. >> if i had your looks i could have gone someplace. go ahead. >> this is a hard transition to make because you just talked about first responders and public workers and no one would dispute the bravery and the heroism and the dedication that you are so involved in education with charter schools and things like that. >> right. >> i'm not going to put words in

your mouth. what do you make not politically of what's happening, you have to admit it's rahm, in chicago. this is so crazy, you can't make this stuff up it's happening in the president's, and he has never said an unkind word to any union or union member in three and a half, four years so he can't go against rahm. >> let me say this to you. first of all, 9/11. >> yes. >> we should never forget it but we should also not forget the 7/7, thank you 41. it's easy to forget when we had our backs to the wall worst. 9/11 was bad, and we rose above it. so was december 7th, 1941 and so were other days in american history. i believe we ought to come up with a holiday that honors all of these days where we really say okay, let's grab ourselves up and let's get going. now, back to the teachers union, i'm very involved in education. i'm chairman of a charter school

in harlem, harlem's promise academy. jeff cannon should be cannonized. what he's doing with these kids in his life is not to be believed. i have no issue with paying people lots of money. i'm well-known as a serial overpayer. >> well, let's, we won't mention any names. >> i only deal with italians, him, wadellnardelli, you know. if you're an irishman -- we're not paying teachers competitive wages, in some parts of america they don't make the kind of money they should make but i don't think there's any reason why we shouldn't hold people accountable for performance. >> exactly. >> i looked at that convention last week and i'll tell you what bothered the hell out of me. i have trouble not being a partial. i'm a very staunch republican, working like hell for romney, i think we're going to win, by the way, i still continue to think

we're going to win, but the teachers have to understand one thing, they've got to deliver. they chose to be in a profession where they've got children's lives in their hands. that's their decision. they've made it. we cannot allow poor kids to leave high school unable to read or write or compete. this lovely, you got, try to take the shine out of my head this morning. >> now working on the lighting. >> she has a 17-year-old young man, wants to go to be a technician, talk to her, it's all about education. i wouldn't be here today and he wouldn't be here if we didn't have the benefit of great public school educations, so all this nonsense has got to stop. at the end of the day, what are you doing to give these kids a toolbox to be able to be competitive when they grow up and go out in the world? >> ken, we just heard from kevin tibbles, who is in chicago, and he brought up the point that the teachers unions say that a lot of this is out of their control.

you have kids who are coming in who, 80% of them are getting their lunches and food for free at the schools, not eating at home, in poverty-stricken neighborhoods, in rough neighborhoods. i think you need to have pay-for-performance, too, but how do you counterbalance what's going on? >> that's easy. i'll take that argument. that requires that the teachers rise to a higher level because they have to make up for what these kids don't have at home, or what these kids have been deprived of in their lives. >> which is why you have rahm emanuel saying we will give you a 16% raise over two years but you also have to be held accountable? >> look, pay them, give them a $25,000 raise but say all right, let's do the hours. look at our school, 9 1/2 hours a day, saturday mornings, 11 months a year. >> the teachers at your charter cool? >> yes. >> rahm took it from 5 1/2 hours to 7 hours and they're not happy about the 7 hours. that's what it is.

>> let me tell you one story, a principal is having a meeting in his office with a collection of teachers at a school, at some weird hour, 3:26 or 3:27, i remember the old clocks, tick, tick, tick. at 3:27 the guy was talking to this group of teachers, they got up and walked out! where is your passion? where is your dedication? i have been very successful, he's been very successful. we do it for nothing because we love what we're doing. >> we agree we have to weed out the bad teachers and give pay raise tolls the great teachers and great teachers helped everybody at this table but we haven't talked about the parents and that sort of gets at where becky was going with the question which is if you don't have the support system at home, you and dick, we all did at this table have a great support system at home. we have to evaluate the teachers and make them rise to the occasion, how do we evaluate that -- >> do i punish a kid born to a

14-year-old mother who doesn't know who the father is? do i punish that kid? >> no. >> do i legislate to that woman, you can't have children at 14 years old. that's that. it doesn't work that way. i'm given these kids. we're given these kids. jeff canada, if you want to see him with these kids, he does as much as he can for them that they don't get at home, a hug, a squeeze. >> andrew, to your question, my daughter taught at a charter catholic school in bushwood, brooklyn. the mother superior in that school visits every home of every applicant, requires the family to come to church every sunday. in answer to your question is it's not just the time spent on the campus. you've got to go in, you've got to provide a social safety net that says we're going to feed them, we're going to protect them, we're going to give them the right environment to study and learn and nurture.

it's more than just whether it's 5 1/2 hours or 7 hours. you said it earlier, great teachers don't teach for seven hours. they're teaching for 20 hours, because they're thinking about their kids and the problems those kids have. >> what would be easier, andrew, to change the fabric of society that makes it difficult for parents to be involved with their children? there's that expression -- >> no, no. >> to have the courage to change things that you can. what do you need to do first, improve education or make every family a better family and two parents and all have enough money. how do you change the fabric of society? >> i think we have to have high standards, the question is how do you judge, this is what becky was saying, when you're also dealing with all of these other issues. >> how do you fix what the parents are dealing with? >> let me give you a model, joe. in the city of new york, the capital expenditure is about $17,000 a kid now.

it's less for gen ed, a lot more for special ed. you go in a classroom in jamaica high school and forest hill high school, it's pillar to post. you look at each individual school it's demographic and you say we're going to reverse the funding. what's the primary role of the school, producing a kid that can either go on to a higher level of education or become employed. so what you do is, you create a board of directors, you make that principal the chairman of the board, you fund it from the school level, and you say here is $17,000 times 1,000 kids. you want to spend that one buying erasers from your brother-in-law, well, by the way, at the end of the school year, if those kids don't go on to a higher level or become employed, we're firing you. the board of directors is going to be parents, faculty, clergy,

people from the community. why is bronx high school so admired by everyone in public education, not just here in the city but around the world? it's because they have an engagement. you've got to engage at the community level. my answer, look at what ken does. ken is the chairman of the school. he holds the faculty, the management responsible for the product. what's the product? if mark fields delivers a ford fiesta with three wheels he's out. if i deliver a kid at the end of high school that can't be employed or can't go to college, out. and that's the way it should be. >> there has to be accountability. >> a lot of people that showed up to teach in our school really meant well, but in the first year it was a disappointment because they couldn't do it. they didn't realize what they signed on for, but dick, the thing i worry about with so-called getting the kid ready for the next grade, the way the teachers cover that up, they

promote a kid that can't do the work, so we get kids 8 or 9 years old that are already three grades behind. how is that kid going to compete? forget about -- >> they can never catch up. >> forget about anything. you want that kid to begin to feel good about himself. you want him to be able to go to home depot and start as a lot boy and ten years later, 15 years later, be the president of a division. look at aaron -- god -- this is a terrible thing about being 77, you forget thing, aaron flow, the president of the eastern volition, joe mcfarland, these guys started at the very bottom but they had the basics, they could read, they could write. i'm not asking you to make these people nuclear scientists, i'm saying just give them the basic tools that they can compete. >> the bottom line is if it's not working and you don't have the performance and if the students aren't getting something out of this you got to change the system somehow, have some way to start at it and what

better way than go from the teacher level on. >> this issue that's up now is one you could argue back and forth but let's take more egregious behavior, that rubber room situation in new york where you have a teacher sitting in there for ten years and the teacher's union is protecting them? you want to show sincerity, throw that chip on the table, get rid of the rubber room, get rid of the guy running real estate for ten years, getting paid over 100 grand a year and randy weingarten was defending him. >> seems what's really happening in the nation at this point and what people are going through in terms of what they are getting back, public sector and private sector workers. >> we're reaching a crisis point, an inflection point. it's getting worse, not getting better. better education in public schools is getting worse and you got pockets where they do great, manhasset, fabulous public

school system, great neck, port washington, the north shore and south shore. then you go to roosevelt where the state had to take over the schools. >> we have less than a minute left, so we've seen scott walker deal with this and he was elected twice, chris christie finally got things done in knowledge, you know the beating he took. this is rahm emanuel, former chief of staff of president obama and it's in chicago. how does this -- don't you think this gets settled very quickly? >> yes. >> for political reason? >> no, i don't think it gets settled the way they think it gets settled. >> how do you think? >> this would be the end of rahm emanuel's political career if he doesn't deal with head-on. it will haunt him. >> head-on in which way? >> don't tpay them. >> make the stand, auto i'll doing this. the issue are the children. >> they put devil's horns on him. >> there's a congressman from south carolina, tim scott, he's

proposal called the employees right act. 90% of all people that belong to a union never voted to join a union. 82% of union members want their leadership recertified every three years. this is union membership. 80% of union memberships want a vote required before the union can spend money on political causes. we're getting there, okay? people are waking up. >> it's weird to have the former chief -- president obama has, you've seen his treatment of the union, kid gloves, every single opportunity he's had. >> it's his base. >> right, it's his base. here's his former chief of staff in a dieia metr diametrically o you think axelrod and others are sitting down trying to figure out how to handle this? they have to be. >> joel klein was chief of the edit division of the justice

department, look what he did with public schools in new york city as a democrat. this is not a political issue. >> but there is an election in 56 days, ken. >> we have children, not getting ready to compete in a more competitive world every day and forget about where you stand politically. it doesn't matter. i think rahm emanuel will stand up and be accountable on this one. i really believe that. >> it could be expensive, some of his former employers. >> it could well be. but i really believe he has a chance to show his sincerity. >> mayor is different from senator or someone in the administration in washington. they actually have to do things and have money they have to keep track of. it's a totally different animal. >> thank god for mike bloomberg, mike has been an incredible help to help get these kids educated in new york city. >> we'll continue this conversation with mr. grasso and ken as well. coming up next on "squawk" the future of finance, outspoken bank analyst and author of "exile on wall street" mike mayo

joins us and much more on the chicago teachers union strike and one viewer tweeting in "unions need to accept wage/benefit reductions and teacher evaluations. union workers' compensation should be drastically cut." >> they're talking about pay increases and teacher evaluations. >> "squawk" is coming back in two minutes.

"squawk" is back on this tuesday morning. we've been looking at the future of finance and joining us from the clsa investor for numb hong kong is mike mayo, bank analyst with clsa, of course the author as well. hey, mike, real quick, you just spent some time with jamie dimon, we've had a big discussion around this table throughout this week and in the past, of course, about whether banks should be broken up, whether they're too big to fail and i understand you posed this question to him. >> yes, i did. before i get to that i just want to comment on what dick said earlier, remembering 9/11, i think we can honor those who died on 9/11 with our actions, and i think the actions of those in the financial industry can be to improve the perception of banking, which is at a 40-year low in the united states, and so many people who died were in the financial industry. i knew several and so i think our actions can be driven by the shareholders and if it's not driven by the shareholders, then it will be driven by the regular

gla glators and part of the action is encourage the large banks to spin off certain underperforming divisions so the valuation could increase and right now the sum of the parts for many of these banks are far above where these market values exist. >> okay, mike. we appreciate that sentiment and the point. back to jamie dimon for a second and this idea of splitting up the banks. you raised this issue with him. what was his answer? >> he didn't say never, and the debate with jamie dimon got heated last thursday when i met with him, he's ceo of jpmorgan as you know, and he said if the discount is 50% and the businesses are no worse off, then he'd consider it, even jamie dimon would consider a splitup. he said it's extremely unlikely, they have all sorts of synergies and they don't see that sort of discount. having said that if you take that logic and apply it to a

citigroup or a bank america, i do indeed think that those large banks should be broken up, if you don't make it in the major leagues, you should be sent back to the minor leagues and that's certainly the case with citigroup and bank of america. >> mike i understand you think this is what should happen. you're also in the business of handicapping what is going to happen. this is going on the last two, three, four years since the financial crisis. what is your expectation that a ceo stands up and does what you're suggesting? >> i'm talking to many investors at our clsa conference in hong kong, 3,000 investors, 200 companies, as you said, it's at 19th year and i'm sensing a change in sentiment, in fact i think shareholder activism or shareholder rights is reaching a tipping point where shareholders are more willing to speak up, and you saw that at citigroup where 147 days ago the shareholders of citigroup said

no to the executive pay at citigroup. it's 147 days and citigroup still hasn't taken an action so that doesn't give you a lot of hope that they or anyone else are going to break up their bank, but shareholders are getting more aggressive and to the extent that these valuations, the sum of the parts remain far above the current market values, i think you'll see more moves, so if we get to the annual meetings next year and the valuations are still cheap, i think you'll see more talk about this and talking to the investors i'd say they think the chance at least one large bank will break up is between 10% and 50% over the next four years, so it might not be jpmorgan, but i do think there's a pretty good shot one of the banks will be broken up and as you know i upgraded morgan stanley two months ago on the theme of the sum of the parts thinking it's worth double where it was trading at the time. >> let's talk about that morgan stanley call. it was a controversial one. you don't like most of the banks. morgan stanley, which has been an underperformer pretty much

across the board the last couple of years you now like. why? >> well, i have not recommended morgan stanley for four or five years. i upgraded the stock when it was in the middle of a freefall, when the reported second quarter earnings, and what i said is if they report another quarter like they did in the second quarter the ceo's job could be at risk and the sum of the parts was worth double where the stock was trading at the time. >> so now that the stock has gone on a little bit of a tear, what is your expectation? >> well, the stock is up 30% in the last two months so you see that's a nice start, but the stock was at $13, it's at $17 now. i think the stock goes to $23, and do you want to hear the story of what happened when i upgraded morgan stanley? >> sure. >> okay, well i said the ceo's job is at risk and i upgraded the stock. so a little unusual on the, right after their terrible

earnings so after i returned to the sales floor, it was 2:30 in the afternoon, and i talked to the clsa sales force, i returned to my desk and who did i have a call from but the ceo of morgan stanley, james gorman. ceos don't call me. i'm not in the habit of being close to the ceos. i was thinking what is the best for the stock so i was a little nervous, didn't know if i'd be yelled at, didn't know if there'd be a lawyer in a line, and i called back james gorman, ceo of morgan stanley and they had their staffers in the line, it was all legit and the first words out of his mouth were "so that wasn't very nice." that broke the ice, but he didn't go into hiding. he didn't get defensive. he talked about the last three years and all the trash he had to clean up, the issues with the moody's downgrade and nbia and the conversion from mitsubishi having to go back to japan and the broker generation. july 9th was a huge day for

morgan stanley, that's when they finally completed the broker generation. i said your brokerage margin stinks, your r.o.e. is lousy, stock prices horrific and he said "i know, i'm not happy about that and i'm going to do something about it. you just wait and see." so it's a data point. he can't be in this position two years ago but he's not being defensive, at least he's listening. >> mike, thank you for the story. good luck with the conference. we appreciate your perspective and look forward to seeing you back in new york city. >> thanks a lot. >> thank you. that's what happens when you're on delay. a german court refused to delay its ruling on the country's participation in a permanent bailout fund. lawmaker who pushed for the delay saying the ecb's bond buying program created a completely new situation in whether it is constitutional. we are an hour away from the latest release of u.s. deficit figures, they and zynga lost

chief marketing officer jeff karp left for unknown reasons, after the chief operating officer and chief creative officer left zynga over the last two week. ken what was your point? >> banks are businesses. this notion of put them together, take them apart, it was the be it all, end it all when they put them together. the bottom line whether they're too big or not is the management. look, i am totally biased believer that jamie dimon is one of the greatest businessmen in america. bernie and arthur and i, when sandy fired him, bernie and arthur and i tried to get him to run home depot. >> i didn't know that. >> yes, yes, it was one of the biggest disappointments when he called and he said i know financial services. this is where i'm going to stay. he had nothing then. look at what he created. i used jpmorgan clearing our

business, custodial, money management. they're fabulous at everything. wells fargo same thing. >> what happens when jamie dimon or someone of that caliber leaves and a new manager takes over? >> good question. jamie dimon is such a good manager he's got his replacements in line. there's a bench at jpmorgan. what was jack welsh's greatness at ge, he had a bench. look at the job cody is doing. it's all about running your business and jamie has proven -- look, they do the stress tests. they lost $5 billion, the greatest stress test of all. >> but they were okay. >> they were still as strong as they were. they still made $6 billion in the quarter. how much better can it be than that? that's to me the asset test of size. >> ken langone, dick grasso guest hosts today. lot more with them in a bit.

when we come back the chicago teachers strike straining widespread debate. donald trump will join the discussion on a topic he's written about in his books, columns and speeches, education in our nation. "squawk" will be right back. at merrill lynch, we understand the importance of your goals. today, our financial advisors lead from a new position of strength.

together with bank of america, they have access to more resources than ever before. a steadfast commitment to help you achieve your financial goals in life. that's the power of the right advisor. that's merrill lynch. oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.

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a teacher strike at the nation's third largest school district conditions this morning. the dispute is putting one of the most powerful democrats in the nation up against a very key group of president obama's supporters. donald trump, who is the chairman and president of the trump organization joins us right now his thoughts, and donald, i know you frequently listen in, in the mornings, and i'm wondering if you were listening earlier in our conversations with dic grasso and ken langone. >> i have. i have a lot of respect for the two gentlemen. did an amazing job at the new york stock

exchange and was a friend of mine and still is. ken, what can you say, he built a great company. i liked what they said. it's a very, very complex subject but i really did like what they said. >> so what is the solution? i mean this is politically charged, that just adds another layer to the whole mess. you are talking about a school system not serving its children. >> ken was talking about the incentives, the poshs of teaching, first of all there is nothing more important but the importance of teaching, and also incentives, the hardest part is how do the right teacher -- the school itself knows the best teachers, but oftentimes the best feech of teacher teachers the best politicians. the concept of incentivizing great teachers is amazing and you have to get into the whole charter school thing. i've seen some charter schools that are amazing, as good as anything there is and they're not old, they're two, three, four years old and done an amazing job, you have to also

look at that. in the old days they had the religious schools and some were incredible. unfortunately we seem to be getting away from that but if we can incentivize people to teach and go out and make a good salary and if the right people got that salary, that's the biggest problem. will the right people get the high salary, that would be fantastic. >> you wanted to say something? >> how quickly are you going to settle, donald? this is a huge headache for president obama? >> well, i just built a $900 million building in chicago and it's something i'm very proud of, and i see this going on in chicago and i'm not happy about it from any standpoint. i look at it from that's a selfish, personal standpoint but chicago is a great city and things are going to have to happen quickly in chicago. >> don't you think they will? i don't think we'll hear, i mean

this is rahm, so i don't think we'll hear anything out of the obama administration, any type of comment about what to do in this case, do you? >> no, you're not going to hear any comment and this could go a long -- this isn't the first teacher's strike. >> it's been 25 years though. >> we've had them in new york and all over. this is the one right now under the magnifying glass. you won't hearing anything from washington. >> we have an election in 56 days and former chief of staff and his hometown. >> let's look -- hey, donald, how are you? >> hi? how are you doing? >> good. how is your golf? >> my golf is okay. i try and keep it up. it's a little bit tough. i try. >> you're working hard. donald, we've started a new organization in new york called students first. >> right. >> it's exactly what it is, what it says. we've got joel klein, any sell rie, stand druckenmiller, paul jones. >> sounds great. >> we're going to get together next week at my apartment. >> i think joel klein in new

york has done an amazing job. >> we have got to marshall our forces for these kids because these kids don't have advocates and they need them and deserve them. >> i think it's great and that you're involved is fantastic, ken. >> stan and paul jones. >> donald, it's dick. >> hi, dick. >> good morning. you've got a huge, new investment in chicago, obviously it would be crossing party lines, but what would you whisper in rahm emanuel's ear, if you had the opportunity to do it this morning? >> it's obviously this is an age-old problem and again we have had many, many teacher strikes so we're sort of looking at chicago and that's the current one, but it would be great if you could incentivize teachers. in all fairness, that's what he's trying to do, trying to get some incentive program and they're balking. the chicago teachers union is tough, and to a certain extent they're being very unfair.

they don't want to give that extra whatever it is and they don't want to take away, say more importantly they don't want to take away from the bad teachers. he's trying to do an incentivized program and they're not having it. so i don't necessarily say he's all to blame and sometimes as you know in business, sometimes you have to take a strike, and it could be a nasty strike, but the only way you get it settled is to have a strike, unfortunately. >> ken langone thinks rahm will not back down, that this will be something that he takes head on. what do you think? >> he might not. he's not asking the wrong, for the wrong things. he's really looking to get -- he wants the best teachers and he wants the best teachers to get more money, and the teachers union doesn't want that. they want everybody to be the same. you go into some classes, you have phenomenal superstars, like you do in business and sports, you have phenomenal superstar teachers. you go into other classes and you say how did these people

ever get this job? well they shouldn't be compensated the same. and to a certain extent that's what he's trying to say. i don't know if he's going to be successful, but maybe we should be backing him a little bit. maybe it's not necessarily, you watch the people on the picket line, and you know, i think it's the union to a large extent is being very unfair, so maybe we shouldn't just because he is a democrat and as you know i'm a republican and all of that stuff but maybe we shouldn't be so opposed to what rahm emanuel is trying to do. >> you said the republicans should have hit the president harder during the election, and you were on record for saying that, rasmussen and gallup had a five-point lead for the president. >> yes. >> you did see a bit of a bump. i had someone on -- >> saying we six-point. >> but today "the washington post" has a one-point lead. i had someone say what were the republicans thinking, running a

banker after the financial crisis, basically, you know, bain capital, investment, whatever you want to call it. is that going to be able to, is that just going to be a stigma between now and november? does he ever get past that? >> i don't think it's going to be a problem. i think he's a very good candidate. he showed himself under great pressure in florida. he went down to florida, he was really not doing so well. he had to win debates against newt gingrich, who is a great debater, and others. he actually went down under this tremendous pressure, he won the debates, he won the state. i always said and i said to him he won two debates and won the state. that was the best political week of his life. i think he reacts well under pressure and as ken can tell you and dick can tell you, some people in business and in life do not react well under pressure. i think he reacts well under pressure. the pressure is starting. i will say they got a much bigger bump for their convention, there are those that say their convention was better done than the republican convention.

who knows, but they did get a bigger bump than mitt got. substantially bigger. >> we're going to talk to you again next week. we appreciate you joining us. >> be well, donald. >> so long, folks. up next a change at the top of legg mason and much more from guest hosts ken langone and dick grasso. you like how i switched those around? >> you are slick. >> "squawk box" back in a moment. i'm a robot. i know. i know you're a robot! but there's more in you than just circuits and wires! uhhh. (cries) a machine can't give you what a person can. that's why ally has knowledgeable people there for you, night and day. ally bank. your money needs an ally.

take a look at the futures. this morning we have seen green arrows. it looks the dow futures are up 29 points above fair value, s&p futures up close to 3 points. legg mason is looking for a new ceo. mark fetting will stop down november 1st. the head of global distribution joe sullivan will become the interim ceo while the search for a permanent chief takes place. up next, more from ken langone and dick grasso. up next, he guided the firm cantor fitzgerald after 9/11 claimed 960 of its new york based employment, when "squawk box" comes right back.

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our guest hosts dick grasso and ken langone. you were here the day of facebook's ipo. >> a couple days later. >> i apologize. we were talking about what was going on with the stock. do you think there's a failure? some people say that for the company this was a great success given they were able to raise all this money at this, some

would say crazy valuation. i'm curious your perspective as an investor and someone who ran the big board. >> it's a disaster. it's a huge failure. the only declaration of success is that the company raised $10 billion, but at what cost? the brand is broken, the credibility of this company is going to be in question for a long, long time, and frankly, you know, we talked a little earlier about morgan stanley, where was morgan stanley who is in the process of evolving to a client driven business model with the acquisition of smith barney. why didn't someone stand up and say wait a minute, $38 makes no sense based on what our internal analysis is now teg us. >> ken, if you're the ceo of the company and your bankers come to you to you and say we can

support $38, which they were able to support for a day, do you not take that bid? >> getting the highest price you can get speaks for itself. let me say one thing that nobody's talked about, there's a clear rule in underwriting about so-called preconditioning the market. we've got all of these laws, sarbanes-oxley and all these things to react to what wall street did to abuse people, in corporate america. where the hell was the sec? this was the most egregious example of preconditioning the market i have ever seen. >> how so? >> the way it was promoted. >> you mean the company doing it or from other people? >> everybody. here is where the sec didn't have the guts to do it, should have stepped in and saying we're canceling. we're not going to let you do this now, we want the market to cool off. that would have been very, very draconian but you want to know the truth? it was worthy of it. where the hell was the backbone

of the sec? you talk about all the money that was lost in enron? go measure how much was lost in enron and look at how much was lost here. >> i may be about to step in it, let me ask a question. the fault of the company for promoting it or frankly the fault of the media? >> everybody, you guys -- >> when you say that, ken, it was a huge ipo, it was something everyone was familiar with, a huge story. no one at this network ever said it was a good investment. there were plenty of people that were skeptical about it, covering it, because it's a huge business story, that's, you're killing the messenger now, like getting pieded of the weather channel when they cover a tornado. you get mad at the weather channel when they cover a hurricane? >> time-out. three years prior to the ipo, this thing was trading in a private market. >> right. >> that private market i would equate to a short squeeze. it kept getting -- >> different issue. >> higher and higher and higher. that's the preconditioning, kenny, that i think set this

whole thing up. and i think that the sec, i don't blame the sec for this. the sec has disclosure obligations and they have responsibilities to be sure the disclosure is accurate. i think the private market needs to be regulated. >> we'll continue this conversation after the break. >> we have a lot more thoughts about what is really happening for people who are trying to invest in the stock market. "squawk" willi be back after this.

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one more hour with our outspoken guest hosts, dick grasso and ken langone. >> i don't think there's any reason why we shouldn't hold people accountable for performance. jean paul dijorio wants to hold candidates responsible for the promises they made on the campaign trail. a firm devastated by attacks of september 11th turns the anniversary into a day for charitable giving, howard lutnik, chairman and ceo of cantor fitzgerald. the third hour of "squawk box" begins right now.

welcome back to "squawk box" on cnbc, first in business worldwide. our guest hosts, dick grasso, former chairman and ceo of the new york stock exchange having a spirited discussion around the table, ken langone is here, home depot co-founder and chairman. i can't believe we have both of you at the table today. let's take a quick look at futures as we speak, green arrows across the board, dow looks like it would open up 30 points higher, nasdaq and s&p would open higher. joe has news on mcdonald's. >> same-store sales, the stock at this point is indicated up a little bit, the global number was 3.7%, that is in line with expectations. europe was 3.1, a little bit below the 3.4 people were looking for and the u.s. was up three. people were looking for 3.3%. global was in line. the big jaut performance was

atmia, asia-pacific middle east and africa, if not treated can be a serious medical thing, you can't sleep well and it affects a lot of different people, it can cause heart problems but the same-store sales apmea were up at 5.7 i think versus an estimate of 3.3, that's where the outperformance is which allowed it to hit the global number even though u.s. and europe -- >> part of it is a shift in timing raf ma dan, upset by ongoing weakness in japan. the shift in ramadan was good, weakness in japan not so good. >> what a job he's done. >> this is mcdonald's. >> i own a lot of yum stock. >> i'm talking about mcdonald's and you bring up david novak, shameful because you own the stock. he guest hosted, he wanted to read teases and go in and out of

breaks. >> he's fabulous. >> a good golfer, too. >> wonderful human being. >> what was the term, preconditioning the market? >> yes. >> i love it. >> mcdonald's is now -- >> i've only got nine more stocks. >> how many other ones? at least it was a food company, didn't seem that ridiculous, i thought you were going to bring up nike. >> best stock i've owned in the -- yum brands has gone up 12 times in is ayears. >> it's a china story. >> big time. >> i think yum has more locations than mickey d's. >> they have over 700 stores in china this year, that's two a day. he's wonderful. >> i don't know why i'm talking about him but david has been a great leader. >> fabulous. see? >> ken, by any chance, do you own that stock? >> a few shares. >> would you discipline this man? >> that's why he wasn't a member of the stock exchange. >> okay. school is still out in chicago, more than 25,000 teachers and unionized personnel are on strike for the first time

in 25 years there. negotiations are expected to continue today but as of right now there is still no agreement to end this strike. the two most contentious issues are performance evaluations and recall rights for laid off teachers. earlier this morning we spoke with joel packer, executive director of the committee for education funding, about the national implications of the education problems that are taking place right now in chicago. >> nationwide class sizes are going up, there's fewer counselors, fewer reading specialists, there's cutbacks in afterschool programs so school buildings in a lot of places, inner cities are crumbling, that's why we support initiatives at the federal level to provide money to prevent further layoffs of teachers and school employees. >> the stories sparking discussion across the country and right here on our set so we are fielding your opinions via twitter as well and here is one that we received. "teacher's play should be based on the quality of their product,

educate the students, nothing more. everything else is cronyism." we'll keep you updated on the story throughout the show. this is a huge issue that is the water cooler talk around the nation this morning. small business confidence improving in august. the monthly index suggests political uncertainty is making business owners wary about expanding, notably the survey of small business found an unexpected jump in the job creation index which foreshadows future hiring and that could be some good news. we're marking the 11th anniversary of 9/11 this morning. more than two-thirds of cantor fitzgerald's employees were killed when a hijacked plane slammed into their offices september 11th. 11 years later, the firm raises money for charities around the world. mary thompson joins us with howard lutnik, chairman and ceo. >> thank you so much, andrew. mr. lutnik, thank you for having

us. last year you raised $12 million. what is your goal this year? >> just to raise more money. this is the chance for all of our employees to wave their compensation for the day and our customers and clients come to our aid, and we raise money all around the world, doing this all around the world and every penny of revenue we raise today we'll give to 150 different charities. >> you initially started this as a way to raise money for the families of the victims of 9/11, but it's grown into much more. what kind of charities receive the money that you raise today? >> you're right, we started by taking care of the families of 9/11 but since the five-year commitment we expanded wounded warriors, the intrepid fallen heroes fund, so we take care of the military, a lot of cancer research, and a lot of children's charities, huge numbers of children's charities and we bring in celebrity spokespeople to make this a fun day. our employees are giving up their pay and their clients are there so we bring in a lot of fun celebrities. >> a lot of celebrities from the sports world, tim tebow may

come, i understand. >> tim tebow, mark sanchez, eli manning, the crowd is great, lots of actors, michael j. fox, for example, kate upton, the famous model coming, so something for everyone here, and it makes it fun, makes it exciting and we take care of so many different charities. >> let's talk business for a little bit. you are trying to raise money in who has been an extraordinarily different trading environment. do you get any sense it's going to change or improve it in. >> the fed is just trying its darnedest to keep rates low and try to force people into a riskier trade. if your money is sitting on the sidelines that's the craze yiz thing about the current economy, there's trillions of dollars, almost $2 trillion sitting on the sidelines, like geico, staring at you, waiting, how can we get the money back into the market. qe2 became qe3 which is probably in a week so driving rates lower

and trying to force people back into the stock market. >> what are you telling your clients as we approach qe3, how are you getting the money off the sidelines into the market. >> it's one thought which is low interest rates drive what, commodities going higher, gold. why is gold over $1,700 an ounce? because if the money is costing you nothing, you can invest in gold. bonds at historically right near historical lows they're going to drive bonds low, the dollar is going to be under pressure, because u.s. rates are low until europe starts to do the exact same thing, they're about six, nine months behind and you'll see a great dollar rally as they drive interest rates lower makes the dollar much more attractive. >> let's talk about another part of your business, you were operating in what is a dynamic regulatory environment, the sands, so to speak, are shifting. what is the greatest regulatory challenge your business faces? >> we're a middle market

investment firm, so our objective is to take care of a broad group of people who maybe fall just below the radar screen from the giant banks, those clients will get ever better service and the opportunity for them to do swaps, get into the interest rate swap market would be a great opportunity. the world is changing but the way business is done on wall street is changing and it's a fantastic opportunity for cantor fitzgerald and fantastic opportunity for vgc partners. >> will this environment look for to you sell the rest of bgc or look for a partner? some people say you would benefit from the economies of scale in the changing regulatory environment? >> finding the right opportunity and acquiring the right companies is always something we're open to. we've been a serial acquirer of small companies. could that become bigger? sure. the right deal has to be the right deal not only for our partners but shareholders as well so people who rush to do deals that are wrong always pay the price. take your time, get it really, really good mantra. >> howard, we thank you for

having us. we'll be here all day for cantor fitzgerald's charity day. becky, back to you. >> mary, thank you and howard, thank you. we appreciate your time and wish you the best of luck today. when we come back we'll have much more from our guest hosts dick grasso and ken langone. in the next half hour he attended both political conventions, businessman jean paul dijori, how he wants to hold both presidential candidates accountable. our summit on the future of finance continues. tomorrow dick kovacevich and former fdic chair bill isaac. t, i'm so into it, tdd#: 1-800-345-2550 hours can go by before i realize tdd#: 1-800-345-2550 that i haven't even looked away from my screen. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 that kind of focus... tdd#: 1-800-345-2550 that's what i have when i trade. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 ...helps me keep an eye on what's really important to me. tdd#: 1-800-345-2550 it's packed with tools that help me work my strategies,

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welcome back to "squawk box." futures right now, we're going to do reality stuff at night and why can't we do behind the scenes? >> in the commercial breaks here. i've always thought that would be a good idea, stream it live on the web, although it might tone down the conversations. >> when we have these two guys on oh, my god. potty mouth and you say -- >> they haven't had one delay yet for me saying a bad word. >> with you we have a delay just knowing we put on a delay when

you're here should tell you something. >> that's the way you think, you're in the gutter. i don't think that way. >> all right. >> we understand that. >> see if we can get him to say something. get to our guest hosts, dick grasso, ken langone. we've been talking about a lot of issues, in the last hang, guys, you brought up something interesting, what's happened with facebook, and the stain that has left on the retail investor, added up with what happened with the flash crash, added up with the idea that the average retail investor feels like they are sitting at a rigged game when they come to wall street, dick, how do you fix that? what do you think the biggest part of the problem is, and how do you turn it around? >> it can be fixed with a collaborative effort between the sec, the cftc, the markets, okay, and public investors, and there are organizations that should be sitting at the table saying, did the sec and the cftc make a mistake in terms of market structure six years ago

when nms was adopted, regulation national market system. here we have a market in this country where you can trade in fractions of pennies in splits of nanoseconds. nothing wrong with that, except the question was never asked, is that conducive to public participation in the market? >> but can you roll back? >> you can't roll back. you can't shoot the computers. you can't say something is too complex and therefore we're going to break it up. what you can do is you can create a fabric of regulation that makes certain that the least sophisticated user in the market is protected by your rules. if you do that, you in effect take care of everyone up the food chain and we've not done that in in country. we did it ten years ago, more than that when the sec initiated market 2000, we stepped back and said where do we want our

markets to be in five years. i this i that type of analysis bringing in investor groups, institutional and retail, and by the way, the institutional community has been the catalyst for a lot of what's happened, in terms of market structure redefinition. they've lowered their cost, and that's good, but you have to step back and say to yourself, wait a minute, i hear this term "mark-to-market," does anyone believe that fidelity could actually achieve, you know, "x" hundreds of millions of shares times the current price of a given stock in the marketplace today? that's foolishness. we need a comprehensive, non-partisan look at what the structure of the market should be, who should oversee the market and how you protect public investors. >> ken, we had mark cuban as our guest host on friday. he says as an average investor a guy who is investing himself, he's worried another flash crash

is going to happen he sets up trades on a lot of the stocks he owns just to make sure that he is capping any losses he might see in a flash trade. or a flash crash. do you worry about this? >> let me say this to you, we have sliced and diced this industry in 16 different ways. people come into areas they don't understand and shouldn't be in, because they're persuaded. i think you asked earlier about the feeling of the world about banking and wall street. if you don't want people talking about you, don't succeed. part of the price you pay for success is that people assume you did something wrong to become successful. >> retail investors are staying away from the stock market right now. >> you want to know the truth? i think with the complexities of the stock market, go to a mutual fund. go to an index fund. i look at the hedge fund

industry and what it gives back to new york city alone, forget about chicago. do you realize robin hood is essentially a creation of the hedge fund industry. all the people in poverty that are being -- look, let's have some balance here. that's what i'm saying. this guy here, let me tell you about this guy 11 years ago which the world didn't know about. he was ready to open the exchange the very next morning, that's his foresight. y2k, remember the horror of y2k? we went to the new millennium like that, nothing happened. it was a tribute, frankly, to his foresight to making sure why didn't we open next day because the upstairs firms couldn't catch up until they opened it the last week. >> that sense of trust in the institution is not there right now, when you look at -- >> i don't think it will everen there because it's money. howard, look -- >> i would say it's different from where we were ten years ago. i think retail investors used to think this was a great way to

put into their savings and now they feel like there are too many things that could go wrong. i think it's different than what it was last decade. >> you're absolutely right. the flash crash, may 6 two years ago started what was under the covers a growing erosion of public confidence but basically took it to the public's eye and what the sec needs to do and needs to do it with the other regulators and the markets is step back and bring in representatives of public invest investors, institutional investor investor, issuers, because if the markets are entrusted and you can't tap that primary market and step back and say what do we need to do to get the public back feeling good about the stock market? >> especially when the stock markets are at new highs. that's what stuns me is to think that people haven't been putting more money in stocks watching these new highs.

>> to kenny's observation, he's absolutely right. if you were just an index investor, year over year, you're up 20%. look at how much you've talked this show and other shows on cnbc, have talked about the strategy of dividend paying stocks with good growth prospects. you pick that right basket of stocks you're up far more than 20%. >> becky it's four-year highs. >> four-year highs. >> and you've been in 12 years and haven't earned squat, that's the problem. >> i want to go back to the industry, because i happen to think the industry is getting a bum rap. >> i wouldn't disagree. >> look at howard lutnick and jimmy dunne. >> sandler doesn't trade? >> no, it's a private company. >> you're bringing up jimmy dunne but it doesn't trade, i'm wondering where this comes from. >> his golf buddy. >> you owe him some money.

>> no, i don't. i do have an investment in o'neil. wait a minute, willet me finish. it's in the respect i have for the way they dealt with the crisis 11 years ago. >> i'm kidding. i know that. and jimmy is a great ceo, he comes on and he's hilarious. >> let's go back to where we are. >> don't play him, though. >> i'm not going to sit here and allow the industry to take the rap for the psychology of the investor. people forget we went public in 1981 >> home depot. >> 1983 we had a major crisis. 1983 people were calling us crooks and thieves and this and that, and the other thing. we bought a chain of stores from bell waters, it was a bad buy. we didn't shut them, it took us longer to convert them to home depot s. now all of a sudden we're darlings. we have an $85 billion market. we were the same company we are.

the problem is nobody wants to be patient when you invest money. i've got 15, 16 startup investments. every one of them gives me agony at some point in time, and if you aren't prepared to go through that agony, and home tee poe, i remember when we were out raising money where we had, people forget this, we had to get the vendors to give us empty boxes for the overhead because they wouldn't give us product because we didn't have the balance sheet. people walked in, oh, my god, look at that, they didn't know it was air in the boxes. the point i'm making is, if investors get a good dose, you know what my average holding is in my investment? >> how long? >> 33 years. i've owned eli lilly since 1977, when i sold them. my home depot is 33 years. yum brands 15 years. what i'm saying is, the investors have to take a step back and if you want to get into that action, then you got to

understand you're taking a different course. i could have gotten panicked with home pidto when it got down to 18 four years ago. it's 57 today. let's be fair about this. if you're an investor, you won't have the issues you have. if you want to trade, buy everywhere. >> to joe's point it's 12 years a lot of people have been sitting in it. >> depends when you get in. we'll have more from dick grasso and ken langone still ahead. in the next half hour we'll talk business and politics with john paul dejoria, co-founder an ceo of jean paul mitchell systems. we could use that around this table and owner of petrone spirits. if we want to improve our schools... ...what should we invest in?

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welcome back to "squawk b " box." legg mason says the current chairman and ceo mark fetting will step down october 1st. the head of global distribution joe sullivan will become the interim ceo while the search for a permanent chief takes place. when we come back on "squawk," he listened to the candidates at both conventions, now businessman john paul dejoria wants president owe what ma and mitt romney to stand behind their campaign promises, he'll join us in the next half hour. we are a few minutes away from

international trade numbers for july, as we head to break, take a look at the u.s. equity futures, dow futures up by 30 points, nasdaq up by over four and the s&p futures up by 2.3. w, you know, because you been, you know, this is what you had been doing. you know, working, working, working, working, working, working. and now you're talking about, well you know, i won't be, and i get the chance to spend more time with my wife and my kids. it's my world. that's my world. ♪

we are seconds away from international trade data for july. rick santelli is standing by at the cme in chicago. rick, the numbers, in three seconds there, please. >> yes, three, two, one, survey says the trade balance of course going to be a deficit and it's a deficit to the tune of 42 billion, which is actually a bit better than expectations and last month's 42.9 moved a bit lower as well, so pretty decent news and of course why do we pay so much attention to trade balance? well, whether it was the president earlier in his term or going for a new term talking about his goal of increasing exports. we're a consumption economy, increase in exports is no easy task but yet this will, of course, have an effect, the rise and fall of the dollar, all of these issues have an effect trying to build up the export economy as well as the main issue, the health and solvency

of those you're looking to export to. interest rates are mildly higher. between 165 and 170 on the ten-year, been there, done that, don't suspect we'll see a lot of changes until we see the water shed diagram tomorrow from the federal reserve. back to you. >> okay, thanks, rick. i appreciate that. among the other stories we're following, deutsche bank announcing plans to cut costs and shrink its balance sheet. the european financial giant will not ask shareholder force new capital. our colleagues caught up with deutsche bank a few minutes. >> i would look beyond the ecb, the fact is the statement which has been made is above the serious intent the eurozone has, so it goes clearly what the ecrab has said has been the galvanizing event. we had ltro, and now we have the bond buying but equally we had the imf involved, esf, esm, there's been a considerable

amount of institution building taking place but i take the greatest heart from the fact there is tremendous desire to keep the eurozone together. >> when we come back, a businessman talks politics, john paul dejoria went to both political parties' conventions and he'll join us next to talk about his campaign to hold the presidential candidates accountable for their campaign promises. ♪ i can do anything ♪ i can do anything today ♪ i can go anywhere ♪ i can go anywhere today ♪ la la la la la la la [ male announcer ] dow solutions help millions of people by helping to make gluten free bread that doesn't taste gluten free. together, the elements of science and the human element can solve anything. solutionism. the new optimism. and the human element can solve anything. when you take a closer look... ...at the best schools in the world... ...you see they all have something very interesting in common.

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campaign promises are

commonplace in national elections. our next guest wants to make sure the winner of this year's presidential election stands by his promises. john paul dejoria attended both conventions and launched the accountability campaign to hold president obama and mitt romney to their word and john paul is co-founder and ceo of jean paul mitchell systems, owner of petrone spirits. good to see you again today. >> good morning. >> when i was introing that, i like the idea of transparency, but then this doesn't really get to the root cause, john paul, that there are 47% of the people that would like one promise to be kept and 47% that would like the other promises could be kept. >> that's right. >> depending on who is elected, depending on which way it goes there are certain promises from one side that i pray to god are not kept. so how can i want -- you see what i'm saying? it depends on who you're -- >> i know exactly what you're

saying. >> go ahead. >> i think that's why the accountability really casts -- let me give you an example, before we went into the campaign and this is part of the campaign, for many, many years, ron paul was kind of a famous guy now, really a neat man, ron paul was trying to push the congress a bill to audit the federal reserve. lot of people like me thought for many years the federal reserve was the federal government. no, it's a private company, not the federal government so for years he's been trying to put this bill through to audit the federal reserve. he finally got it passed through congress. now it is sitting on the desk of harry reid to get passed by the senate. at least be shown to the senate and it's interesting, a fellow named kurt told me this one here, people must lead so their leaders will follow. well, how do people participate? you write your senator, you write harry reid and say harry reid it's passed congress this bill to audit the federal

reserve it's in your hands. please present it to the senate, just present it to them for a vote, it's already been voted and approved, present it. it's been sitting there and harry reid agreed with this and thought it was a great idea, just present it. people can now lead so their leader also follow. get involved and say hey just present it to the senate. people have to take action. we took off, by the way, on the petrone express to go to both conventions, the petrone express is a 1927 train car that roosevelt campaigned off of and i thought hey why don't we the people get involved. i took my time, spent my money and went there. how do we get involved? first of all i love you out there, okay, really do. we the people must speak up. so here was our campaign, and it's accountabilitycampaign.com, just a few pages. mr. senator, or mrs. senator, presidential candidate, hopeful, congressman, would you please write down all your promises and then say, i will fulfill this in

my first year in office or i'll start to fulfill it in my first year in office or i will tell you why i couldn't do it or why i didn't follow any part of my commitment. if not, if not, i will resign, and now that's accountability. you may think j.p. that's pretty strong. who signed it? first one is a presidential candidate hopeful and his name is gary johnson, libertarian party. he signed that, no ifs, buts and maybes. another guy, this will surprise you, ted cruz. ted cruz is the republican running for senate in the state of texas. he's the guy that went around campaigning little town, little town, he signed it, they both signed it where it said in my first year i will fulfill my promises exactly as promised i will start it or tell you why i haven't done it. i will be accountable, and if not, i will resign. both of them did the same thing, similar words but is that pretty

exciting, where now politicians want to become accountable? that's strong. >> that's, reminds me of some other pledges, in a perfect world you'd get a lot of signatures. i don't know, we wish you luck with that. what was your impression of the two conventions? can i call you j.p.? j.p. is easier than john paul. >> sure, j.p., please. at both conventions the talk was around accountability a little bit and the environment, by the way, which might surprise you a bit, maybe not on the convention floor but both parties were talking about in quiet talks about regulations, there are just too many, except the environment, leave the regulations in there, people are concerned with regulating the environment. they think we're overregulates, but not on the environment. both parties had the same conversation going on, we'll be accountable if the other guy is accountable.

we'll be accountable if the other guy will be accountable. they're both knocking one another. they also both felt at both conventions there was too much knocking, where part of the campaign was look how bad the other guy was, opposed to something of substabs. accountability was what these two guys did, what mr. johnson did, what mr. cruz did was saying i will do this f not, i will resign my first year. if a person makes a commitment and says they'll resign the first year and doesn't do it, we could put it right back in their face but both parties wanted accountability. they both also said isn't it nice how the people are getting more and more involved. how do people get more involved was the question, and it's participate, do something, get involved, whether it's writing a letter to congress saying, not to congress, the senate, harry reid present it to the senate for a vote, take the time to write your own senator and congressman saying let's get something done and people are talking about the conventions. they also at each convention

thought what they did was the best. yeah, we're excited, we did the best, and they were excited, but the thing that was missing was what they're going to do and how they're going to do it. trust me, trust me, i'm going to do this, i'll do this, time for change, we need a new this, we need a new that and what they're all saying is true. but not one of them laid out precisely what we're going to do and how we're going to do it, and how we're going to be accountable. promises are great. we love promises. some of the best speakers in the world were there, and both presidential candidates are good guys, both their wives are powerful, good women but the accountability, where is the accountability? where do we, the people, get to see the results and even know what you're going to do? that's what we need in both campaigns, they talked about it. they were excited and had fun. it's america. >> john paul we appreciate what you're saying today and wish you luck in your efforts. we have a 9/11 moment of silence

coming up so we have to keep it somewhat short and thanks for your time. appreciate it. >> it's okay, on 9/11 let's be accountable. peace, love and happiness. >> or peace, love and profits, is another blog i've heard of. >> and accountability. >> thank you, john paul, very good. coming up parting shots from our guest hosts, former nyse chairman adick grasso and home depot co-founder and ceo ken langone and we remember 9/11. so -- tell me again what happened.

i was downstairs making coffee, and we heard it.

it just came crashing through the roof, out of nowhere. what is it? it's our ira. any idea what coulda caused this? maybe. i just sorta threw a little money here, a little money there. and i loaded up on something my dentist told me was hot. yeah. ♪

the new york stock exchange, as we do every year, preparing to observe a moment of silence to remember the victims of at tacks of september 11th. if you recall it was 8:46 a.m., it marks the time that that first american airlines it was

flight 11 struck the north tower of the world trade center and i'll never forget it, and we think of mark haines at that time and we're going to hit it in three seconds and observe this moment of silence. [ moment of silence ] [ moment of silence ] bob...

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stock of the day is mcdonald's, global comps rising 3.7% in line with street accounts. u.s. and european were just short of consensus. . but asia-pacific, middle east, and africa, beat the street as a result the stock is climbing higher, and a little bit of an indication of some stuff from mcdonald's last time we spoke, do you remember? and they talked about, you know, a little bit of weakness we had seen even though you think that

the weak economy people would drive to mcdonald's. >> they said japan had a weaker economy. this time too, japan still slowed down. >> well, that's, you know -- >> if budget talks don't cut debt, u.s. rating likely to be cut by moody's this time. >> not yet with moody's. >> we had s&p 500, now we're talking moody's. we're going to get final parting shots, dick grasso of the new york stock exchange and ken lango. putting politics aside for a second, where do you see the economy? you look at the stock market and we're at an all-time high, does that make sense to you? >> let me tell you something, last week i visited a nice company based in manhattan called dice holdings. they have an online employment agency. they have 86,000 high-paying jobs looking for candidates. the break point is the education

of the people applying for that job. everything you address in the way of societal needs, it all gets back to education. and i'm taking advantage to make a plug. why am i for romney? because i think he'll do more for public education than obama will. obama's done nothing in four years for public education. the needle has only gone down. we need to get back to what do we need most in america? we need desperately to fix our public education system. it's in trouble, and it will destroy everything else around us if we don't fix it. >> don't we need to fix the unemployment picture too, ken. and that -- >> that goes -- >> it goes hand in hand, but for all the talk about caring for middle class and women and all these things. there's talk is one thing, caring is one thing, but things that are not the way they should be. >> what are you thinking he will do? >> romney? >> that obama won't? >> romney will not be a hostage of the unions. this thing going on in chicago

today is purely and simply the unions. 38% of union households in the recall election in wisconsin voted for scott walker. the union rank and file get we've got to educate these kids. if we're going to give kids a shot at life, why am i here? we've got good educations. we were able to compete. we got to save these kids and we've got to save them by giving them the necessary tools to be competitive in a more competitive world that becomes more competitive every day. >> it's hard to believe that a republican candidate is going to care about kids and educate kids. >> that's -- >> because the democrats have staked out the positions. they care about people, kids, old people. they've got all the good positions. >> right. >> and republicans by definition have all these horrible, nasty, greedy, mean positions. >> ken, before you go -- >> i am going to force you to answer the question. take politics out.

tell the audience on the economy itself, you have investments in so many different businesses, you've seen where the stock market is today. you say we are where? >> i say our greatest days are ahead of us. as a nation. i listen to all this crap from -- >> politicians -- >> no, i shouldn't, i have trouble lying. i happen to think that america is heading into -- we're going to have trouble getting from here to there. >> right. >> we're going to have to take some pain. but don't dare sell this country short. we're at our best when we have -- >> doesn't matter how quickly we return to the american greatness? no? >> over the long-term, no. if obama wins, we'll hit rock bottom, my opinion, by '16, and we'll have a dramatic -- just like ronald reagan, okay. look at clinton, look at what clinton did in eight years. >> he was -- he triangulated. >> he was great for me because he was practical. he knew he had to make peace with the opposition. >> different animal. >> and you think that obama will? >> no, i think we're going to have a worse four years and

that's fine. we'll have to suffer through it. but beyond that, look, i'm going to be 83, 81 in '16. i hope i live another 100 years because this country's going to be in great shape and don't sell america short. mr. grasso? >> i think we've hit bottom in the fourth quarter of this current year. i think we bounce back very strong the second half of next year. america proved in the years '76 to '80, it can get along without a president. i don't think it matters who wins the election. i do think that you will see a robust recovery beginning in the second half of next year. and i just -- andrew, i want to end by hoping that everyone out there, you know, takes a moment to reflect on all that we lost on 9/11, all of the people. and those who walked out of the towers alive, the pentagon, i hope they recognize the heroic,

the incredible bravery of the first responders who allowed them to live. this is a special day to look forward but to never forget what was done on behalf of so many people. >> and it's a wonderful way to end this conversation. as we're looking at images, i believe, that we're looking at images down at the world trade center right now. we thank you both for being here. >> thanks for having me. >> this is a special day, as well. >> we've got four minutes to go now. >> ken has 17 other companies you can talk about. >> yeah, exactly. >> we'll do that. now, there is more than -- we've had people come in and say a president is not that involved when it comes down to what happens. and we haven't come to the senate and the house. >> think about it. think about it. the congress hasn't produced a budget in almost 1,100 days, which means in the reverse, if

the u.s. were a public company, it could not comply with sarbanes-oxley. it's simple, we should have a provision in our constitution, don't produce a budget, we don't pay the people we elected. we'll see how quickly they produce a budget. >> there's been all this argument. andrew mentioned briefly at the top of the blog about moody's weighing in and saying that they're looking at this. they are also saying they would need evidence that the economy could rebound from shock before considering a return to the stable outlook. people go back and forth about whether the rating agencies should be weighing in, but when you look at what happened with the deficits and debt situation, doesn't seem like a bad idea -- >> i think downgrade us and treasuries rally. okay, i think people have not forgotten what happened the last time we were downgraded. i think you also have to look at the rest of the world and say where would you rather be? >> exactly.

and i saw a headline that the dollar is now the weakest level against the yen since june, which is crazy when you consider what's happening in japan right now too. >> look, we have a solution at hand, we won't do it, but we have a solution. term limit, term limit. you get term limits and watch and see how all these problems will resolve themselves for the best interest of america. >> either side making up with the other side after the election? >> it's gridlock because they can't do -- >> just in terms of how we feel as a country. i mean -- do you think the president can hold out an olive branch to his critics on the right and they can accept it? >> no way. >> vice versa? what about if romney's elected you think there's not going to be fury and anger from the progressives? >> that's a loaded question for me. i think romney will reach -- he did it in massachusetts. he was the governor of massachusetts and had to deal with a heavily democratic. >> i worry about how divided the

country's going to be either way. >> different motivation. i think if this president is reelected, he's going to come to the middle because his motivating factor is going to be -- >> his legacy -- >> how history treats his presidency, and he's not going to want to simply sit there for four years and say no. i think we will be pleasant my surprised if he's reelected. having said that, you know, i'm a romney supporter. i don't think we can lose. >> i think he's too much of an ideologue. he's shown his colors about socialism. >> i really thought you were going to say idiot. the real langone finally shows. >> i wish he'd show his records. why shouldn't we know? if i'm going to interview somebody for a job, i want to see their resume, i want to see where they worked, how well they did. >> now -- >> now that you've got --